Thursday, June 4, 2015

In addition to poor industriall production, that appears to be a matter of an overly strong US$, the other part of the US economy that has failed to grow this year is consumer spending, particularly as measured by real retail sales.

Several months ago I looked at state sales tax receipts as a proxy for consumer spending, and concluded that the very harsh winter was responsible for poor sales at the beginning of this year. I updated the analysis one month ago, suggesting the effects of winter had passed, and the continuing weakness was an Oil patch phenomenon. The latest information, through April, indicates that continues to be the case. Note that the actual sales may have taken place in the month before the revenue was remitted to the state.

The epicienter of poor winter sales numbers was New York and Massachusetts. That appears to have abated, at least in New York.

In March, New York reported at +5.1% YoY increase in sales tax receipts. In April, the increase was +4.5% YoY. In January New York reported sales tax receipts up +4.2%, and in February they were actually down -0.3% YoY.

As to Massachusetts, the record is more subdued. In March it reported a +1..9% YoY increase in sales taxes. In April that went down to +0.6% YoY. Campare that with than January's +0.6% YoY rate, and February's +0.2%.

Now contrast that to what has happened in Texas. When I first reported on state sales taxes, Texas had YoY comparisons of +11.2% in January and +11.7% in February. But look at the last two months, as reported by the Dallas News:

State sales tax collections in April grew by only 1.1 percent over the previous year, as a “significant slowdown” in oil and gas-related activity pinched previously robust growth, Comptroller Glenn Hegar said Wednesday.....

He said collections of the 6.25-percent state sales tax in the trade, restaurant, construction and manufacturing sectors “continued to grow” last month. ...

March receipts grew by just 1.5 percent over last year.Texas hasn’t seen sales tax growth that was so low, low, low in the single digits since spring of 2010.....

That's a huge slowdown, and almost certainly means month-over-month decreases, if we were able to seasonally adjust!

At the end of June, the Census Bureau will report state by state retail sales for the first quarter. The evidence from state sales tax receipts is that it will confirm that the ongoing weakness in consumer spending is primarily an Oil Patch issue.

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